Why This Billionaire is Selling Treasury Bonds
PIMCO’s Bill Gross is sometimes called the “Bond King” because his investment skill has made his investment funds the biggest and most successful bond funds in the world, and rewarded him with a personal fortune of $1.8 billion.
30 years of consistent returns have made Gross a top choice for pension funds that depend on virtually guaranteed returns. And that investors are paying close attention to the fact that only has Gross sold all U.S. Treasury bonds from his investment funds, he’s also actively selling Treasuries short, in order to profit from falling prices.
In his latest Investment Outlook (published monthly) Gross says:
“I sit before you as a representative of a $1.2 trillion money manager, historically bond oriented, that has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden.
Unless entitlements are substantially reformed, I am confident that this country will default on its debt; not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies – inflation, currency devaluation and low to negative real interest rates. Our clients, who represent unions, cities, U.S. and global pension funds, foundations, as well as Main Street citizens, do not want to be shortchanged or have their pockets picked…”
Investors should not ignore Gross’ warnings.
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